Desicritics Category: BizTech: Internet

Innovation - That Strange Mythical Animal

Dr Bhaskar Dasgupta — Sat, 7 Feb 2009 05:16:13 EST

It was an interesting email that I got from Google Alerts. I have an alert setup for “innovation” as a keyword. The interesting thing is that I get the most interesting and curious hits on that keyword. As it so happens, on the same email, I got referred to a Businessweek article on innovation and another article on how Nortel could not save itself from bankruptcy despite investing heavily in innovation.

Innovation is a tough thing. What exactly is it? Something to do with new things? OK, lets run with it for now. But everybody and his dog wants to be known as innovative. Nothing wrong with it at all. But just like every buzz word, it needs to be treated carefully. People can get into all this innovation business too much and then forget about the basics of business. The two articles given above are interesting examples of this phenomena.

My son has been on World of Warcraft for the past 4 years now and has a good little business running there. So I have a fair idea of what is happening there. He has also managed to rope in my little princess as a magic maid, so that promises to be a good story one day. Anyway, I do appreciate the points made in the article about how WoW has managed to incorporate basic principles of innovation into its game so that it is doing brilliantly. I quote some of the main principles that the authors quote as lessons from the game:

Reduce barriers to entry and to early advancement
Provide clear and rich metrics to assess performance
Keep raising the bar
Don't neglect intrinsic motivations
Provide opportunities to develop tacit knowledge, but do not neglect broader knowledge exchange
Create opportunities for teams to self-organize around challenging performance targets
Encourage frequent and rigorous performance feedback
Create an environment that rewards new dispositions

But I have a bit of an issue here, and that is that the principles seems to be driven from the story and then generalised. To put it in another way, if I had to pick up these principles and plonk it into any other business, i can, very easily, but does that mean that my old business has suddenly become innovative? Or that innovation starts gushing from each pore? No, obviously not. None of these principles are wrong at all. But at end of the day, people have to keep a a laser eye out on the main business of selling profitably.

Which brings us to the second example, that of Nortel. Nortel did everything that these principles said should be done. It turned its attention to new products, it brought in imaginative thinkers, changed its investment policy, new products were gushing out, strategy was changed, people were let go and new people hired, and so on and so forth. But does this mean that they did wrong? No, just that their basic idea of migrating the firm into a new world of web 2.0 was simply not good enough. It just bombed. As a matter of fact, you could point towards its debt load but then again, they already had $2.6 billion in cash. That again was not enough to save it from going under provided its products were good enough to provide a good cashflow. Which it didn't.

Depending upon which product category you refer to, innovative products have a very high failure rate, ranging from 40% to 90% (as reported in the HBR – June 2006 edition). When you are talking about such a high failure rate, to maintain innovative capability is paramount. You have to dust yourself off and keep on working. In a recent research paper where innovation was studied with respect to Sun, what is normally held to be an innovative company. After one of their products bombed, the researchers coin what is called as Innovation Trauma. This manifests itself by disillusionment, cynicism and contagious demotivation.

So what do you do to improve matters? The researchers suggest that individuals who were championing and pushing innovative products should be given time to disengage from their previous work. Second, they need to conduct post-mortems on the failure to find out why that happened and if they can learn from the results. Third, this postmortem is best if its done collaboratively by the original team or a team of some sort, an innovation anonymous, if you will. Fourth, seed the failure aspects into a new project so that the old failure is uplifted by the excitement of the new project while the new project is calibrated downwards by the caution of the old failed project. Expectations management.

So what do you do? Here’s something that we are trying to do. The British Political system is pushing heavily on the idea that Britain has to become an innovative idea. Pretty good stuff, but how do you deal with innovation? I have recently been invited to join a group on Innovation which will assist in coming up with strategies to improve the UK innovation footprint. It is not easy. Actually, anybody can come up with a good idea. Ideas are dime a dozen, but to get from the idea stage to a company which is stand alone, has some cash in the bank, has a good order book with some good client companies, ah!, now that’s the holy grail.

So what we are hoping to do is to provide that bit of a helping hand from the corporate and government sides. If a small firm does have a good idea, we will get together and try to do two things, (1) try to assist in framing the new idea as something that is innovative in terms of resolving a business problem and (2) try to assist by championing it inside our firms. Obviously no money and all that stuff, but in my experience, innovators fall in love with the idea rather than how it will resolve the problem.

They forget that we are in business to sell (anything, potatoes, widgets, credit cards, etc.) to somebody who can pay for it. Do not want to go into detail, but the idea has to be something that somebody is willing to push his hands into his back pocket and put out money. So despite having great ideas, if you forget the basic elements of selling and making products that will sell, all those innovative ideas will be useless.

Technorati Tags: innovation

Book Review: Hacking VoIP

Ganadeva Bandyopadhyay — Sun, 23 Nov 2008 12:37:48 EST

In a concise two hundred and eleven pages the author has attempted to cover the protocols, security threats and their countermeasures, audit issues related to Voice over Internet Protocol(VoIP). As outlined in the beginning of the book, the audience is the VoIP administrators and other related IT personnel tackling the nitty-gritties of implementation and day-to-day functioning VoIP in an enterprise network.

With a clear primary goal of discussing security exposures and their possible solutions, the book does a good job as it takes through a security specific discussion and labs on signaling via SIP(Session Initiation Protocol) and H.323. There are also discussions on security issues related to media layer as implemented via Real-time transport protocol and security issues for both signaling and media in Inter-Asterix eXchange(IAX).

Some of the interesting topics in the book also include exploiting weaknesses in SNMP utilizing a tool such as GetIf and making free calls using VoIPBuster. The book ends with the topics on countermeasures and audit portions. Major approach presented is the ability to provide security at both the session and media layer.

With a focused audience and a clear goal, the book does justice for a technology moving towards maturity even as it finds a growing acceptance in the enterprise. Only one suggestion can be to include some more developments, solutions and techniques still not implemented in enterprise networks but having good scope.

Book Review: Javascript: The Good Parts by Douglas Crockford

AJ — Fri, 7 Nov 2008 06:28:37 EST

The phrase "JavaScript master" and Douglas Crockford are considered synonymous in the web development world. When I heard that Crockford was writing a book on JavaScript, especially a guide to the better features of one of the most maligned but popular languages in the current web development industry, I was sure I wanted to read that book. I opened the book with very high expectations and unsurprisingly, I was not disappointed one bit.

With the recent explosion in the usage of JavaScript, the interest in JavaScript is at an all time high. When Netscape, which created JavaScript, released the specification of the language in the mid-nineties, it was unable to define a robust and complete specification for the language due to pressures of rushing out a production release. As a result, fair chunk of the language is not well thought out which contributes to bad programming style and promotes some bad programming practices. It is not the programmers but the language which causes this. Programming models based on Global variables, JavaScript eval, inconsistencies in variable scope, and confusion regarding how objects are created and handled in JavaScript can all be the sources of programming errors and give rise to bad programming practices.

This book, as its name suggests, focuses on the "Good Parts" of the JavaScript while cautioning the readers against the "Bad Parts" of the language. All the above mentioned "bad parts" and many other programming constructs are cautioned against in a two-part appendix.

Two other appendices also touch on JSLint, the powerful JavaScript syntax and program correctness verifier and JSON, the preferred and increasingly popular text data exchange format. These two chapters give a taste and a starter for two very important support tools for JavaScript.

However, the meat of the of the book focuses on the better parts of the JS language. In ten chapters, Crockford explains why features like - JS inheritance model, prototypes, objects, arrays and how the language handles regular expressions - are very useful and make JavaScript a fairly powerful language in its own right. Object Oriented programming in JS, how methods and the prototype chain is handled and can be used to write clean and powerful code are all a must read for advanced JS programmers.

The language of the book is very simple and sprinkled with illustrative source code which makes understanding the concept in discussion easy to understand. That said, this is not a beginners book. This book is aimed at those who have programmed in JS and have a working knowledge of the language. Nevertheless, it is a highly recommended book for anyone looking to get into better and more powerful JavaScript programming.

Racist Web Game Muslim Massacre Taken Down By Developer

Aaman Lamba — Sun, 14 Sep 2008 05:38:07 EDT

The limits of free speech are tested more sorely on the Internet. While protecting the space where wrongs can be criticized freely, and truth can be spoken to power is essential, there are obvious limits to what is appropriate and what needs to be held to account.

Freelance developer Sigvatr found this out the hard way when he released an online game Muslim Massacre in which the protagonist is an "American hero" who lands in the Middle East with the mission of 'wiping out the entire Muslim race', training his guns on Muslim civilians and terrorists, "the Muslim leader Osama bin Laden, their radical cult leader Muhammad and finally Allah" . He went on to defend his actions, saying,

"Ultimately it's just a game where you blow the gently caress out of Arabs...I don't even know how to interpret it myself any more. The bottom line is that I enjoyed making it and it's fun to play.

The Muslims represented in the game aren't meant to be based on actual Muslims. If I was to try and come up with a meaning for the game at this moment, it would probably be something along the lines of metaphorically destroying the stereotypical depiction of a Muslim.

The initial reaction of gamers ranged from "love the audio" and "can you fix the spawn points" to "why would you do this?". Other quarters were less forgiving, calling for the game to be taken down. The developer finally took the game down and cleared the website, posting an apology.

I would like to make a public apology for any offense that I might have caused through releasing this game, and to Muslims in particular. My intentions when releasing this project were to mock the foreign policy of the United States and the commonly held belief in the United States that Muslims are a hostile people to be held with suspicion. I would like to make it clear that I have never shared such a belief and my intention was to mock those who actually do believe these things.

It quickly became obvious to me that releasing this game did not achieve its intended effect and instead only caused hurt to hospitable, innocent people. I believe removing this game and website will do much more to attain my desired effect than leaving it on the internet, so I am doing just that.

I would like to ask for the forgiveness of Muslims around the world and to make it clear that I did not release this game with ill intent. So without further ado, I would like to say that I am truly apologetic for what I have done and will take full responsibility for all offense that has been caused. I can only hope that any further misgivings can be laid to rest.

While there can be no doubt as to the offensive nature of the game, and self-censorship was the right step in this case, it is likely there will be renewed calls for blanket censorship on games and the like, a policy which is difficult to enforce, and which prefers to err on the side of caution, and thereby limiting potentially important creative efforts.

Book Review: Website Optimization

Ganadeva Bandyopadhyay — Sun, 14 Sep 2008 00:52:12 EDT

Undoubtedly the focus of Website Optimization is on converting website viewer into customer by having a set of best practices. In the age where legendary search engine like Google has grown into a verb in English, the book is a must read for the web technologist.

The book covers lot of ground in useful topics such as search engine optimization, pay per click optimization, conversion rate optimization, etc. across two main divisions of search engine marketing optimization and web performance optimization.

The book is packed with useful real-life experiences .More importantly even concepts where the author has learned through hard way have not been left out. The example for this appears in the topic 'Hurl harmful outlinks', part of the discussion on natural search engine optimization. The author learnt this tip when his client had low rankings on Google in spite of intensive promotion over six months.

There is list of tips given for optimizing CSS, Ajax and javascript. There is also discussion on client side and server side techniques for increasing the performance. Among the server side methods discussed, include optimizing parallel downloads using multiple domains, caching frequently used objects, using HTTP compression,etc. On client side techniques include loading javascript on demand, caching off-site resources locally,etc.

One of the important concluding discussions is on website optimization metrics and measuring them. Some of the website success metrics include unique visitors, Average time on site(ATOS) and length of visit, pages per visit, bounce rate,etc. The second part is the search engine marketing metrics to improve website PR campaigns and conversion rate optimization efforts. The web performance metrics give the important numbers about load times.

Product Review: Google Chrome - The New New Thing

Aaman Lamba — Tue, 2 Sep 2008 15:47:07 EDT

Google seems to bringing order to its cornucopia of services, slowly yet strategically. Like all grand designs, the emergence of something big wasn't evident in the beginning, perhaps even to the creators. The basic structure remains the same - to provide convenient access to information through an unobtrusive intelligence layer. The services have been layered in, providing essential plumbing to what is evidently an operating system for the always-connected noosphere.

Another critical component was introduced today - the much-awaited Google Chrome web browser. While one might wonder what incremental value yet another browser might provide as an interface, it is the primary means of human-Internet interaction, and played right, could mean a consistent memory layer that brings the Google Mind ever closer to sentience. From a user perspective, there's little to write home about just yet, if one overlooks the relatively new process-independent tab architecture (IE 8 does the same thing, and IE 7+ separates the browser UI and tabs in terms of permissions) and the minimalistic interface. The pain of giving up essential add-ons and workflow steps might mean more than using the next new new thing, but Google is looking beyond the desktop client, even if the first release of Google Chrome is Windows-only.

In a few months or perhaps sooner, it is highly likely Google Chrome will be the front end of Android-based phones. The non-standard Windows UI used in Google Chrome makes sense when one visualizes a small scale equivalent on a mobile phone. The near-instantaneous startup is going to be handy for an always-on interface. Google might go further in terms of bundling services if it didn't have the ghost of Microsoft Anti-Trust in its rear view mirror. As it is, it allows you the option of changing default search engines from Google and Google applications don't seem to be running any differently within Chrome or other browsers, expect perhaps Google Reader. The most-visited sites are a nice touch when opening a new tab, and the ability to slide a tab over others is a neat touch. There does not seem to be torrent download capabilities and I strangely didn't see any auto-discovery of RSS feeds on a website. The setup told me it was importing my Firefox bookmarks, but I don't see them anywhere, and why leave out IE?

JavaScript and CSS rendering appear to be smooth, and performance is good. I noticed five chrome.exe processes in my task manager when I had only three tabs opened, ranging between 20 MB and 42 MB each in terms of memory usage, but a large number of page faults, and minimal bloat over an hour of running. The memory utilization was almost three times that in Mozilla Firefox for a similar load. One simple script in MovableType gave unexpected results, triggering a search when I hit the save button. Pages can fail to be rendered, with an 'Aw Snap!' error that blanks out the tab. Not a nice experience, to be frank.

Incognito Mode, or as it came to be known when Microsoft announced the feature in Internet Explorer 8 - porn mode - is invoked by Ctrl+Shift+N and removes pages browsed from the browser cache and history, and avoids cookies.

For the moment, I'm not going to be giving up any of my current browsers, and it remains to be seen if this new kid on the block lives up to its promises.

The CFO-CIO Crossover, Part III

Dr Bhaskar Dasgupta — Sun, 31 Aug 2008 12:30:59 EDT

We spoke about the interesting roles of CFO and CIO and about the development of both roles in the past and the present. In this essay we will look at the future and make some predictions about the cooperation between them.

1. What developments will occur in IT in the next three to five years? If one looks at a standard finance function, then these are the broadly the main chunks: Product Control, Financial Control, Finance Administration, Operations, Mandatory Reporting, Management Reporting, Taxation, ALM, Risk etc. All these areas are going to get impacted by improvements to workflow systems, communication applications, business intelligence systems, reconciliation systems, fraud detection and exception management systems, product control systems, spreadsheet management applications, better reporting cube / data warehouses / data marts, ERM systems, better cost analysis applications, and so on and so forth. One can write a full book on just this question, but those are the application facing bits. There will be huge numbers of finance related changes coming from the internet, the client aspects, the hardware bits, the database bits, the networking parts, the communication channels, the IT people, the service delivery model, and so on and so forth, which is too much to go into now.

2. What issues will arise for finance and accounting in the next three to five years? The main issues which will arise can be divided into the following categories:

(a) future regulatory driven change such as liquidity risk management proposals, contingency funding modelling etc. – this will cause a significant impact, best case scenario – a new regulatory report, worst case scenario – a full-blown Basel II type implementation;

(b) feeding old regulatory changes into BAU such as Basel II – Basel II has been rolled out but it will need more time to bed down and impact BAU aspects such as risk weighted capital allocation and performance evaluation;

(c) hitting barriers to service delivery such as human capacity or process architecture / issues;

(d) sharply increased demands for aggressive capital control and management;

(e) increasing demand for better quality financial intelligence and MIS by the business;

(f) little appetite for errors or operational risk or high emphasis on reputational risk management emanating from financial misstatements or mispricing,

(g) continuing and increasing M&A activity etc.

3. How will these issues and developments impact the CFO/CIO relationship? From a generic basis, as can be seen from the above, the level of technical and technology impact on the CFO is just going to grow and grow and grow. So CFO’s will become much more demanding. Not only that, they will expect CIO’s to take responsibility of BAU activities, something that is not commonly understood and accepted. SOXA approvals by CIO’s have caused a severe issue in terms of how CIO’s see their roles, but if this is going to be extended to other parts of the Finance business, then the CIO will become much more embedded in the BAU Finance Change function. So the impact will be from both sides, pushing each other into each other’s arms. Whether it is a hug or a squish depends upon how open-minded the two executives are.

4. How will the issues change the way IT aligns with business strategy? IT will move up the decision making value chain. Before any changes come down the pipeline, IT will start getting involved, because financial institutions have started to understand the benefit of including IT earlier in the decision making process. The business has started to realise that while they define the strategy, delivery is most often dependent upon IT. So the more they involve IT, the more delivery is improved in lock step. IT has to become proactive as well, in terms of analysing its service delivery model to become far more agile and mobile; in terms of analysing its technology M&A methodology; in terms of its reporting data warehouses; etc.

5. Will IT drive changes in business strategy? Will business strategy changes and external factors (e.g. globalisation) drive changes within IT? Will both occur simultaneously? Will IT drive changes in business strategy? On a corporate level we will see very little of that, but on a line of business level yes we will. I can see and have seen business strategy change because new technology has come forth, such as in trading. For example, expansion of product coverage within the FIX protocol can trigger changes in business strategy by suddenly opening new markets or changing existing markets. Changes in technical market infrastructure, such as addition of a new stock trading platform can trigger and driver changes in strategy. Better risk management and fraud detection technologies can give confidence to managers that they can extend personal loans or credit cards to new customer bases. Will business strategy and external factors drive changes in IT? Of course, completely. And yes, both can and do occur simultaneously.

6. How will these changes play out? Let me bring my tarot card deck, crystal ball and tea leaves cup out. That is to say that anything might be possible.

7. Will these changes have an impact on IT’s influence on the integrity of the financials? Anything that changes IT has a 30-50% chance to impact the integrity of the financials (based very roughly on the proportion of systems impacted by SOXA compared to the non-impacted systems). So that will indicate where we have an issue if any external factor impacts technology.

8. What does the future look like for finance and accounting technology? Very bright. And that is primarily because the finance and accounting arena is and will be hit by a tidal wave of changes from its business clients, regulators, professional bodies (IASB..), and so on and so forth. And massive, rapid and huge change like this is perfect breeding grounds for that perfect storm for technology, it will provide mandatory driven investments, fear, ambition, vagueness, and dreams for results/order where technology loves to breed and innovate

We have spoken about the interesting roles of CFO and about the development of both roles in the past and the present. We have also made some predictions about the developments in the future. One aspect is certain, technology is here to stay. While before a CFO would worry about the professional standards, rules and processes versus the humans who would operationalise them, the CFO has to worry about the technology as well. In many structural ways, technology itself is changing the finance profession and vice versa. The future not only promises to be bright, it promises to be entwined like the proverbial double helix.

Technorati Tags: technology, management, financial institutions

Degrees in the Virtual World?

Dr Bhaskar Dasgupta — Mon, 25 Aug 2008 04:46:19 EDT

One of the advantages of having friends who are now big, grand pooh-bahs in the academic world, is that one gets a fascinating insight into what the future of our society will be. After all, these professors are putting in place, policies and procedures that will impact learning, teaching, research and the development of universities now and deep into the future.

This summer, I was having a conversation with two of my friends who are both senior professors in the United Kingdom, and both in responsible management positions with huge publication records. The conversation drifted to how universities would be reacting to structural changes such as the internet, the virtual reality world, globalisation of education, reduction in public education subsidy, globalisation per se, the business cycle, change of the student persona from 'dumb thankful student' to 'demanding educational service recipient customer', and so on and so forth.

It was a fascinating conversation and I learnt a heck of a lot about how universities operate. Given the financial pressures, universities are now moving to get as many students as they can from outside of the EU. Why? That is because they are the students who pay the full whack, sometimes an eye watering 10-20 times the amount paid by local or European students. But then when somebody is forced to mortgage their house, or take a very expensive student loan, then when they come to these Universities, they naturally demand a quality education.

Faced with a university and staff which never had to justify their quality (well, not that much anyway), it is a shocking change in philosophy and operating environments. And from what I am hearing, it is not something that is being accepted easily. Both my friends were talking about how they are finding it difficult to recruit staff, or to motivate them or to keep their students interested with a good pipeline going.

I was obviously coming at this from a different perspective (see here for my previous twittering on universities). I think that the universities of today will be very different from the universities in say, a decade from now. For example, the firm where I work, is planning to set up its own business school. The firm where I worked previously had a full fledged campus and its own business schools. Large firms are starting - or already have - their own educational institutions.

But more importantly, in the dim and distant past, I was qualified as a Prince 2 practitioner. It involved my sitting in a class room and giving examinations, two of them, over an entire week. Now I am rolling this same qualification out to my function and we will end up with more than 100 people working on this by end of the next year. Guess what the major difference is? 70% of the previous time would now be done electronically. In other words, e-learning will replace 70% of the prior classroom teaching. And then somebody will come in and run an examination which will also be electronically administered. So what happened to the teacher?

Oh!, did I tell you that my function is worldwide, which will be deployed out to anybody who wishes to be qualified as such? Something akin to a global university? Why not? See this story as an example. For the first time, an educational certificate will be granted to people who will be trained primarily via Second Life.

Did you spot the other issue, namely that replication of knowledge delivery is now near cost-less (at least to the provider, I still have to pay a few quid for every additional licence). A teacher's main rationale for existing was that knowledge transmission was a 'one to one' or at the most 'one to many', which was not replicable easily. You couldn't just read a book and be done with it, but required additional explanations and practice sessions. But now, it can be replicated and if you do want to see a face, well, you can go on Second Life to get a virtual one.

And the education on Second Life or e-learning is and can be asynchronous. You do not have to be online or active at the same time as that of the teachers, because it can be taped or replicated or delivered irrespective of whether it is night or day.

You might then say that one would still need a degree to get a job. Well, here's another issue, because that is not necessarily the case. If all that I am checking is your ability to do a job, I dont need to see your university degree. For example, if you want to trade in the financial markets and offer investment advice, all you have to prove is that you know the laws, language and know the professional standards (which is what Prince 2 type of courses do). Yes, I know I am talking about a unique type of role, but consider most of the knowledge based industries which require professional non-technical training. This is not relating to stuff like engineering, medicine or architecture.

But what if you wanted to hire a salesman for napkins? How about wanting to hire a software coder? No? How about a graphic artist? What about a weather forecaster on TV? What about a customer service representative? What is the link between his job, a degree for it, a way of learning, or even a particular university? How will an electronic degree change this job or its earning potential? Points to ponder, eh?

Technorati Tags: Education,Universities,Internet

The CFO-CIO Cross-over, Part II

Dr Bhaskar Dasgupta — Sat, 23 Aug 2008 01:14:13 EDT

We earlier spoke about the interesting roles of the CFO and the CIO and what it means to “manage the business” and to “work very closely”? Before we can answer these questions though we have to take a look at the development of both roles. These questions were taken from a workshop arrangement from New Zealand, the answers are mine.

Part A: The past and the present

1. What influence has IT had in getting business to where it is now?

Hugely important, technology has changed the character of financial services, but then, financial services was always at the forefront of adopting technical innovation, whether it was the idea of using wax and clay tablets in Sumerian times to pigeon post in Europe during the middle ages to telegraph during the Victorian and European wars or fax machines or now in terms of global private banking websites, international stock trading electronic gateways, automated insurance quoting engines, offshore call centres linked by CRM systems, intelligent credit risk scoring engines, and so on and so forth.

Technology has allowed firms to gain scale without needing human investment, it has allowed firms to concentrate on their core competitive advantage factor while disposing of all non-core functions and assets.

2. What is the relationship between CFO/CIO at present?

a. What are the positive and negative consequences of the CFO having responsibility for IT?

The main negative consequence is that the CFO, if he is not smart, sees IT as a cost line rather than something that is as important to the bank as the human resources function. Frankly, you wouldn’t put the HR function under the control of the CFO, would you? Then why IT? So the entire IT function starts and stays defensive if treated as a barely tolerated and often thumped cost line. On the positive side, if the CFO is smart and can see technology as a business enabler, then the synergy that the combination of CFO + IT is world beating. IT can benefit from the discipline that a CFO can bring to the table such as demanding business cases for technology investments, driving strategic change, improving technology and delivery sourcing, etc.

b. What are the consequences of having two specific reporting lines into the CEO? Are there any advantages to two distinct reporting lines?

At that level at a big bank, it far too heavily depends upon the three individuals concerned and not on the functions themselves. Because, at that level, the nitty-gritty details of actually running the technology or financial function rarely appears on the radar screen. What does matter at that level is the autonomy given to the two functions, the level to which the finance function is challenging and managing the business to the level to which the technology function has provided value addition to the business. So whether it is good or bad depends upon the three people concerned.

c. How can the relationship between the two be bridged?

Usually it can be bridged with difficulty, because for a good relationship, it requires the CFO to have a forward-looking, change oriented and risk taking frame of mind, while it requires the CIO to be disciplined, talking business, structured, stabilising and think long-term. But some ways that can be useful is for both to write their own visions of where the business will be in five years, then translate that into what it will require their functions to be (people, technology, process, places, etc.) and then get together to dovetail these two plans. Then operationalise by dumping a dollop of agreed governance and investment. Some questions are below which can help you determine if a bridge is needed or some improvements need to be put in:

i. Do the CFO and CIO meet regularly with a set agenda?

ii. Does the CFO challenge the technology plan? And on what basis? Is that besides a cost basis?

iii. Does portfolio management of IT discretionary spend happen? And is that overseen or controlled by the CFO?

iv. Does the IT function provide rigorous business cases which are tracked and followed up?

v. Are there productivity improvement measures which the CFO and CIO agree on the business as usual side of technology?

vi. How involved is the CFO function in the technology sourcing side?

vii. Do you look at purchasing as a stationary and paper purchasing function or is there a strategic sourcing function which has both technology and finance participation?

3. How successful is IT in aligning with business strategy both on an organisational level and specific to the finance department? Is it always complementary or can it end up being at cross purposes?

Generally in financial institutions, IT is well clued-up and successful in aligning with the tactical business strategy, but not the very high-level business strategy levels for obvious reasons. Technology is an enabler of business, not a primary driver of business. You rarely go into a country because your technology allows you to do so, however, you go because of revenue, cost or other strategic drivers and technology makes it happen. On the finance department side, I am afraid IT and Finance are rarely aligned. Reasons are many, because many technology folks are scared spit-less of the finance folks. So the bare minimum is provided and initiative/innovation is frowned upon. Consequently, at best the finance and accounting technology function is outsourced in many industries or ignored at worst. The bright side is there is rarely at cross purposes but that is a poisoned chalice, an ignored function is more dangerous to a firm than a contested function because at least there is more chance of somebody actually noticing that contestation and doing something about it.

4. What influence does IT have on the integrity of financials?

A huge, literally earth-shattering influence. It is a direct relationship, because good IT means good financial integrity. This is the reason SOXA has a deep IT element as well. When I had to sign off SOXA compliance previously, it was clear that the impact was huge and any changes made to the relevant technology systems and processes would have a significant impact on the financials of the firm. Let us put it in another way, 90% of all changes that will hit our finance functions will have some kind of an IT component, and a crucial part of the success of the project will be dependent upon the IT performance and delivery.

We spoke about the interesting roles of CFO and CIO and about the development of both roles in the past and the present. In the last essay we will look at the future and make some predictions about the cooperation between the CFO and CIO.

Technorati Tags: technology, finance, financial institutions, management

Broadband on Batteries

Shantanu Dutta — Tue, 19 Aug 2008 01:35:47 EDT

While booking an air ticket online the other day, there was a power cut just at the point when the gateway was processing the payment from the credit card and the modem shut down. The resulting confusion led to stress as I tried to contact the travel portal, the bank and the airline to get a clear picture regarding ticketing, charging of payment and so on. Online travel portals are not your typical travel agent of old whom you knew by name and had done business with for years. The anonymity of the voice on the other side of the line, the peculiarity of the problem and their obvious inability to understand, let alone help only added to the confusion. This practically undid any advantages that doing transactions online might have provided.

In India, there is a lot of political backing from both the major political formations to increase internet penetration which is among the lowest in the Asia–Pacific region.

“India has the lowest Internet penetration rate at 3 percent in the region, according to a survey by U.S.-based digital research firm comScore Inc. According to the survey

- South Korea boasts of the greatest rate of Internet usage, with 65 percent of its population using the Internet in May.

- China clearly has the largest online population with 91.5 million people. The number of monthly unique Internet users in India is just a quarter of that figure at 22.8 million.”

- South Korea has the most active online population, using the Internet an average of 17.4 days per person in May, and dedicating 31.2 hours to viewing 4,546 pages during the month. Indians on the other hand got onto Cyberspace an average of only 11.4 days per person in May and viewed 1,400 pages over 14.7 hours.

Clearly though, the government is not pushing for internet penetration so that citizens can watch videos on Youtube. Rather the intent is to promote e-commerce and e-governance through the internet platform and thereby increase productivity and efficiency. While all that is a good thing, the commensurate development of an infrastructure backbone is missing.

For instance, look at energy and power generation. After all, my story started with the recounting of a power failure in the middle of a commercial transaction. Even as I write this, electricity in India’s national capital goes on and off several times a day.

Anybody who has ever experienced a power cut in India would know empirically that India simply does not produce enough electricity for its needs and will not do so in the foreseeable future although the national electricity policy envisages power for all by 2012 and per capita availability of power to be increased to more than 1,000 units by 2011-12. With the deadline barely four years away it is impossible that this goal would be ever met.

While industrialization is progressing at a rapid pace, the fact that power generation has not kept up has meant that even relatively less industrialized states like West Bengal which once were power surplus, have power cuts now. In fact, the more industrialized you are, the more is the demand. Maharashtra, for example, faces a deficit of more than 30 per cent In fact, the colloquial term for power cuts “load shedding” has now become part of the country’s rural folk lore.

As I complete typing this piece on a laptop and upload it from a speedy GPRS modem, I remind myself that having a increasingly high tale density of phones and laying strategies to wire up the country to the customer’s doorstep and using Wi Max to connect up the whole country won’t work if we don’t have a proper infra structural backbone. You can’t run a broadband service operating on batteries ! It just does not work !